Under the time and material pricing method, a customer would be charged for: \[\begin{array} { l c c c c } & \text { Material } & \text { Labor } & \text { Overhead } & \text { Profit } \\ & \text { Costs } & \text { Costs } & \text { Costs } & \text { Margin } \\ \text { A. } & \text { Yes } & \text { No } & \text { No } & \text { No } \\ \text { B. } & \text { Yes } & \text { Yes } & \text { No } & \text { No } \\ \text { C. } & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \\ \text { D. } & \text { Yes } & \text { Yes } & \text { No } & \text { Yes } \\ \text { E. } & \text { Yes } & \text { Yes } & \text { Yes } & \text { Yes } \end{array}\]

A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E

The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: \[\begin{array} { l r } \text { Variable manufacturing cost } & \$ 180 \\ \text { Applied fixed manufacturing cost } & 90 \\ \text { Variable selling and administrative cost } & 60 \\ \text { Allocated fixed selling and administrative cost } & 75 \end{array}\] What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 160%?

A) $150. B) $384. C) $390. D) $624. E) None of the other answers are correct. A) $150. B) $384. C) $390. D) $624. E) None of the other answers are correct.

Neptune Pool Company is involved in a number of competitive bidding situations. The following costs are anticipated for a project to be bid for Trimex Manufacturing: \[\begin{array} { l r } \text { Direct materials used } & \$ 680,000 \\ \text { Direct labor } & 2,450,000 \\ \text { Allocated variable overhead } & 570,000 \\ \text { Allocated fixed cost } & 230,000 \end{array}\] Which of these costs would be treated differently if Neptune had either excess capacity or no excess capacity?

A) Direct materials used, $680,000. B) Direct labor, $2,450,000. C) Allocated variable overhead, $570,000. D) Allocated fixed cost, $230,000. E) None of these, as all four costs are considered in both situations. A) Direct materials used, $680,000. B) Direct labor, $2,450,000. C) Allocated variable overhead, $570,000. D) Allocated fixed cost, $230,000. E) None of these, as all four costs are considered in both situations.

The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: \[\begin{array} { l r } \text { Variable manufacturing cost } & \$ 180 \\ \text { Applied fixed manufacturing cost } & 90 \\ \text { Variable selling and administrative cost } & 60 \\ \text { Allocated fixed selling and administrative cost } & 75 \end{array}\] What price will the company charge if the firm uses cost-plus pricing based on absorption cost and a markup percentage of 120%?

A) $420. B) $459. C) $594. D) $672. E) None of the other answers are correct. A) $420. B) $459. C) $594. D) $672. E) None of the other answers are correct.

Which of the following choices correctly denotes factors that can influence a company's pricing practices for goods and services? $\begin{array}{llll}&\begin{array}{c} \text { Market } \\ \text { Conditions } \end{array} & \text { Costs } & \begin{array}{c} \text { Customer } \\ \text { Demand } \end{array} \\\hline \text { A. } & \text { No } & \text { Yes } & \text { Yes } \\ \text { B. } & \text { No } & \text { Yes } & \text { No } \\ \text { C. } & \text { Yes } & \text { Yes } & \text { Yes } \\ \text { D. } & \text { Yes } & \text { Yes } & \text { No } \\ \text { E. } & \text { Yes } & \text { No } & \text { Yes } \end{array}$

A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E

Exam 15: Target Costing and Cost Analysis for Pricing Decisions

When pricing products, many companies use target costing and/or cost-plus pricing methods. Required: A. Briefly explain how target costing is applied to new products. B. How does target costing differ from cost-plus pricing? C. Can an activity-based costing system be used with target costing? Explain

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Question 61

Which of the following is (are) a key feature of target costing?

(Multiple Choice)

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Question 62

The curve that shows the change in total revenue that accompanies a change in quantity sold is called the:

(Multiple Choice)

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Question 63

Consider the following statements regarding the economic pricing model: I. The economic model is limited in use because a firm's demand curve is difficult to determine. II. The marginal revenue and marginal cost model is valid for all forms of market organization (perfect competition, oligopoly, and so forth). III. Cost accounting systems are not designed to measure the marginal changes in cost incurred as production and sales increase. Which of the above statements is (are) true?

(Multiple Choice)

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Question 64

Which of the following statements regarding price elasticity is false?

(Multiple Choice)

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Question 65

From an economic perspective, a company's profit-maximizing quantity is found where:

(Multiple Choice)

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Question 66

If a company uses a cost-plus approach to pricing, it will find:

(Multiple Choice)

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Question 67

The controller for Shutterbug Photographic Supply has established the following cost pools and cost drivers: $The controller for Shutterbug Photographic Supply has established the following cost pools and cost drivers: An order for 1,200 boxes of film-development chemicals has the following production requirements: \begin{array}{l} \text { Machine setups }\\ \begin{array} { l r } \text { Pounds of raw materials } & 16,000 \\ \text { Pounds of hazardous chemicals } & \text { None } \\ \text { Inspections } & 4 \\ \text { Machine hours } & 400 \\ \text { Direct materials and labor cost } & \$ 24,000 \end{array} \end{array} Shutterbug established a target price by adding a 40% markup to total manufacturing cost. Required: A. Determine the order's target price by using the activity-cost pools. B. Assume that Halifax used a single, combined overhead rate based on weight of raw materials. 1. Determine the predetermined overhead rate. 2. Determine the expected cost of the order. 3. Determine the target price. C. Which approach above (A or B) seems to be a more reasonable method to establish target prices? Explain.$ An order for 1,200 boxes of film-development chemicals has the following production requirements: Machine setups Pounds of raw materials 16,000 Pounds of hazardous chemicals None Inspections 4 Machine hours 400 Direct materials and labor cost \ 24,000 Shutterbug established a target price by adding a 40% markup to total manufacturing cost. Required: A. Determine the order's target price by using the activity-cost pools. B. Assume that Halifax used a single, combined overhead rate based on weight of raw materials. 1. Determine the predetermined overhead rate. 2. Determine the expected cost of the order. 3. Determine the target price. C. Which approach above ("A" or "B") seems to be a more reasonable method to establish target prices? Explain.

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Question 68

Dexter, Inc. manufactures various lines of computer equipment and is planning to introduce a new line of laptops. Current plans call for the production and sale of 1,000 units, with estimated costs as follows: The average amount of capital invested in the laptop product line is $900,000 and Dexter's target return on investment is 18%. If Dexter uses cost-plus pricing based on absorption cost, the markup percentage the company must use would be:

(Multiple Choice)

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Question 69

The four tasks that follow take place with the concept known as target costing: 1-Value engineering. 2-Establish a target selling price. 3-Establish a target cost. 4-Establish a target profit. Which of the following choices depicts the correct sequence of these tasks?

(Multiple Choice)

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Question 70

Under the time and material pricing method, a customer would be charged for: Material Labor Overhead Profit Costs Costs Costs Margin A. Yes No No No B. Yes Yes No No C. Yes Yes Yes No D. Yes Yes No Yes E. Yes Yes Yes Yes

(Multiple Choice)

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Question 71

The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: Variable manufacturing cost \ 180 Applied fixed manufacturing cost 90 Variable selling and administrative cost 60 Allocated fixed selling and administrative cost 75 What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 160%?

(Multiple Choice)

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Question 72

Neptune Pool Company is involved in a number of competitive bidding situations. The following costs are anticipated for a project to be bid for Trimex Manufacturing: Direct materials used \ 680,000 Direct labor 2,450,000 Allocated variable overhead 570,000 Allocated fixed cost 230,000 Which of these costs would be treated differently if Neptune had either excess capacity or no excess capacity?

(Multiple Choice)

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Question 73

Which of the following terms describes a pricing strategy in which a new product's initial price is set high and then eventually lowered to appeal to a broader range of customers?

(Multiple Choice)

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Question 74

The Razooks Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available: Variable manufacturing cost \ 180 Applied fixed manufacturing cost 90 Variable selling and administrative cost 60 Allocated fixed selling and administrative cost 75 What price will the company charge if the firm uses cost-plus pricing based on absorption cost and a markup percentage of 120%?

(Multiple Choice)

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Question 75

If the target profit is $60,000 for a volume of 480 units, fixed costs are $168,000, and the variable cost per unit is $450, then the markup percentage on variable cost would be:

(Multiple Choice)

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Question 76

Wardlaw Company, which experiences considerable seasonal variation in its activity and has a high level of fixed costs, is preparing a bid for a project. This particular project will be done during a slack period of the year. Required: A. How should the fixed costs be handled in the bidding approach to this project? B. Assume that the company wins the bid and performs the job on a profitable basis, consistent with the results as projected in the bid. Several months later, the customer contacts Wardlaw and requests a bid to do another job. This project, however, must be done during a peak season. How should Wardlaw's management respond? How do you think the customer will respond?

(Essay)

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Question 77

Penetration pricing is a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share.

(True/False)

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Question 78

Which of the following choices correctly denotes factors that can influence a company's pricing practices for goods and services? Market Conditions Costs Customer Demand A. No Yes Yes B. No Yes No C. Yes Yes Yes D. Yes Yes No E. Yes No Yes

(Multiple Choice)

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Question 79

When determining the markup to be used in a cost-plus pricing formula, many companies base the markup on a target:

(Multiple Choice)

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Question 80

Showing 61 - 80 of 99

Which of the following is (are) a key feature of target costing?

The curve that shows the change in total revenue that accompanies a change in quantity sold is called the:

Which of the following statements regarding price elasticity is false?

From an economic perspective, a company's profit-maximizing quantity is found where:

If a company uses a cost-plus approach to pricing, it will find:

The four tasks that follow take place with the concept known as target costing: 1-Value engineering. 2-Establish a target selling price. 3-Establish a target cost. 4-Establish a target profit. Which of the following choices depicts the correct sequence of these tasks?

Under the time and material pricing method, a customer would be charged for: Material Labor Overhead Profit Costs Costs Costs Margin A. Yes No No No B. Yes Yes No No C. Yes Yes Yes No D. Yes Yes No Yes E. Yes Yes Yes Yes

Which of the following terms describes a pricing strategy in which a new product's initial price is set high and then eventually lowered to appeal to a broader range of customers?

If the target profit is $60,000 for a volume of 480 units, fixed costs are $168,000, and the variable cost per unit is $450, then the markup percentage on variable cost would be:

Penetration pricing is a pricing strategy in which a new product's initial price is set relatively low in order to gain a large market share.

Which of the following choices correctly denotes factors that can influence a company's pricing practices for goods and services? Market Conditions Costs Customer Demand A. No Yes Yes B. No Yes No C. Yes Yes Yes D. Yes Yes No E. Yes No Yes

When determining the markup to be used in a cost-plus pricing formula, many companies base the markup on a target:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

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